Euronext signs up ICE to replace LSE derivatives clearing unit

Reuters Staff

2 Min Read

LONDON, April 3 (Reuters) - Pan-European bourse Euronext said it will use a Dutch unit of the Intercontinental Exchange to process its derivatives transactions after the purchase of its current clearing house collapsed.

Clearing ensures a transaction is completed even if one side of the trade goes bust. A wider range of derivatives transactions will have to be cleared to improve market safety and transparency.

Euronext, which operates exchanges in Paris, Amsterdam, Lisbon and Brussels, currently uses LCH SA, the Paris-based clearing unit of the London Stock Exchange Group, which it wanted to buy for 510 million euros ($544 million).

After the LSE’s planned merger with Deutsche Boerse was vetoed by European Union competition officials last week, the LSE cancelled the clearing unit sale.

With Euronext’s contract with LCH expiring at the end of 2018, the bourse operator had to find an alternative quickly, and on Monday said it was signing a 10-year deal with ICE Clear Netherlands to clear its derivatives and commodities contracts from the second half of next year.

Euronext will invest 10 million euros in ICE Clear, and said headline clearing fees would be cut by 15 percent.

“Overall, this represents a long term, open access, sustainable and innovative euro zone based clearing proposition for Euronext and its customers,” the Paris headquartered bourse said in a statement.

Euronext had already begun offering customers the ability to clear their stock trades on EuroCCP, in which the exchange bought a 20 percent stake, as an alternative to LCH.

Euronext accounts for about half of LCH’s French business. Shares in LSE were slightly down in early trading. ($1 = 0.9374 euros) (Reporting by Huw Jones; editing by Susan Thomas)